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AG Kaul Asks Congress to Strengthen Paycheck Protection Program, Other Multistate Actions

Wisconsin Attorney General Josh Kaul on May 6 joined a group of 24 state attorneys general asking the federal government to strengthen the Paycheck Protection Program (PPP). The AGs sent a letter to Congressional leadership highlighting concerns about implementation of the program, which provides loans to small businesses struggling due to COVID-19.

Concerns from Kaul and the AG coalition include PPP loans made to large, publicly traded companies and lack of transparency. To address these concerns, the AGs suggest Congress adopt several measures before allocating additional PPP funding, such as:

  • Providing stronger, explicit guidance to lenders and eligible businesses.
  • Prohibiting lenders from giving preference to certain customers.
  • Allocating a portion of future funding to minority owned small businesses.
  • Providing more flexibility and technical support to businesses.

Also this month, AG Kaul joined a bipartisan coalition urging USTelecom to further develop robocall traceback and other tools to help law enforcement address illegal robocalls; a coalition urging Congress to reauthorize the Violence Against Women Act (S. 2843/H.R. 1585); and a coalition expressing concern about President Trump’s executive order to keep meat and poultry processing plants open.

Leitner v. LIRC (Unemployment Benefits)

In Leitner v. LIRC (2019AP1196), the Court of Appeals District IV held that the plaintiff was ineligible for immediate unemployment benefits after voluntarily terminating her employment.

Plaintiff Rebecca Leitner was working at the University of Wisconsin Medical Foundation from 8:15 a.m. to 5:15 p.m. In June 2017, the Medical Foundation changed her schedule to 8:00 a.m. to 5:00 p.m., making it difficult for her to transport her child to school. In July 2017, Leitner was approved for leave for four hours a day to care for a sick family member. In September 2017, Leitner voluntarily terminated her employment at the Medical foundation, citing the schedule change and need of more time to care for her sick family member.

Despite voluntarily terminating her employment, Leitner argued she was entitled to immediate unemployment benefits because she met two exemptions under Wisconsin’s unemployment benefits statutes (Wis. Stat. § 108.04(7)):

  1. There was good cause attributable to her employer because the change in her schedule made it difficult for her to transport her child to school and fundamentally altered the terms of her employment.
  2. She terminated her employment to care for a family member.

The court found that Leitner was not eligible for immediate benefits because:

  1. The change in schedule made it difficult, but not impossible, for her to transport her child to school. Furthermore, the original 8:15 a.m. to 5:15 p.m. schedule had not been a specified condition of her employment at the Medical Foundation.
  2. According to a physician’s report, Leitner did not need more than the four hours the Medical Foundation allotted her to care for her sick family member.

Dominion Voting Systems, Inc. v. Wisconsin Elections Commission (Voting Software Confidentiality)

In Dominion Voting Systems, Inc. v. Wisconsin Elections Commission (2019AP272), the Court of Appeals District IV held that parties reviewing voting software during a recount may disclose opinions based on review of the software.

Wis. Stat. § 5.905(4) provides that if there is a recount in a state election, a party may review software components used to record votes in the election. The statute requires the Wisconsin Election Commission to grant access to software components if the party enters into a confidentiality agreement.

In 2016, the Jill Stein Campaign requested review of the Election Systems & Software, LLC’s electronic voting system used in the November 2016 election. Allowing the campaign to review the system pursuant to § 5.905(4), the Commission provided a confidentiality and nondisclosure agreement that required the campaign to maintain the confidentiality of “all proprietary information.” The Commission did not specifically prohibit the campaign from publicly disclosing any opinions based on review of the Election Systems software.

In this case, Election Systems argued the Commission’s confidentiality agreement was not broad enough to satisfy the confidentiality requirement of § 5.905(4). According to Election Systems, the Commission should have prohibited the campaign from disclosing any comments or opinions derived from the campaign’s review of the voting software.

The appeals court disagreed with Elections System, finding that the plain language of § 5.905(4) does not prohibit reviewing parties from disclosing opinions based on review of voting software. Instead, the statute simply requires maintaining confidentiality of “proprietary information” (i.e., the actual software components). The Commission was not required to expand on the statutory language in its confidentiality agreement with the campaign to prohibit disclosure of opinions based on review of those software components. Furthermore, the court found that the campaign’s disclosure of opinions on the software components was not an unauthorized use of Election Systems’s trade secrets.

AG Kaul Withdraws Act 21 Opinion on High Capacity Wells

On May 1, Wisconsin Attorney General Josh Kaul sent a letter to the state Department of Natural Resources (DNR) stating he has withdrawn an opinion from his predecessor interpreting 2011 Act 21’s effects on DNR permitting.

In 2016, former Attorney General Brad Schimel issued an opinion concluding that DNR lacks regulatory authority to require cumulative environmental impact analyses and/or monitoring wells as conditions to granting high capacity well permits under Wis. Stat. § 281.34. The Schimel opinion rests on 2011 WI Act 21, which prevents agencies from promulgating policies with the force of law without explicit legislative authority.

Per the Schimel opinion, DNR began issuing high capacity well permits without considering cumulative environmental impact. Environmental advocacy group Clean Wisconsin then challenged those permit approvals in court, arguing that a 2011 state Supreme Court decision, Lake Beulah Management District v. DNR, said DNR has the authority to preserve waters of the state under the constitutional and statutory public trust doctrines. The Clean Wisconsin case is now before the Wisconsin Supreme Court, which accepted the case last year.

In his letter to DNR Secretary Preston Cole this month, AG Kaul withdrew the Schimel opinion on which DNR was relying for the high capacity well permit approvals. The Kaul letter cites the circuit court decision in Clean Wisconsin – that court found the Schimel opinion was incorrect and contradictory to Lake Beulah.

However, it is unclear if the Schimel opinion is officially “incorrect,” as the circuit court decision has been appealed. The Supreme Court in Clean Wisconsin now has the opportunity to clarify whether Lake Beulah actually addressed the newly enacted 2011 Act 21. The Clean Wisconsin case is currently on hold at the Supreme Court.

U.S. Chamber Institute for Legal Reform Poll: Bipartisan Majority of Americans Support COVID-19 Liability Protections

A bipartisan majority of Americans support protecting businesses from lawsuits related to coronavirus, according to a U.S. Chamber Institute for Legal Reform (ILR) poll released earlier this month.

“The global pandemic has caused tremendous economic harm to our nation. As employers plan to reopen safely and sustainably, the last thing they need is to face a financially crippling lawsuit despite their best effort to comply with public health guidelines,” said ILR President Harold Kim.

61 percent of poll respondents generally support coronavirus lawsuit protections. Support for liability protections grew when respondents were asked about specific sectors. Provided businesses are following the latest health guidelines, 84 percent support protecting essential businesses like grocery stores and pharmacies. 82 percent support protecting restaurants, stores and other businesses from lawsuits by people claiming to have contracted coronavirus there. 74 percent support protecting companies who ask sick employees to stay home. 75 percent support lawsuit protections for hand sanitizer and cleaning supply companies. Majorities of Republicans, Democrats, and Independents all expressed their support for these policies.

Wisconsin Civil Justice Council and a coalition of businesses are asking the Wisconsin Legislature to adopt these types of reforms to protect Wisconsin businesses as the state begins to reopen.

Wisconsin Supreme Court Oral Arguments – April 2020

Several oral arguments that had been postponed in March due to COVID-19 were rescheduled for the April calendar. April oral arguments were conducted remotely and featured several high-profile cases.

 

April 20 – Veto Authority Cases

The Supreme Court heard oral arguments in two cases challenging the veto authority of the governor. 

Bartlett v. Evers challenges vetoes by Gov. Tony Evers in the 2019-21 state budget. The court will review whether the governor can strike “essential, integral, and interdependent parts” of a state budget passed by the Legislature, using examples from Evers’s budget such as the redirection of Volkswagen settlement funds from a school bus replacement program to an electric vehicle charging stations program and the transfer of $74 million in funding to local government transportation projects.

Wisconsin Small Business United, Inc. v. Brennan challenges vetoes by Gov. Scott Walker in the 2017-19 state budget. In that budget, the Governor used his partial veto authority to delay the effective date of a program by 60 years and extend another program by 1,000 years. This case asks whether the governor’s partial veto authority allows him to change dates in a piece of legislation.

 

April 22 – Administrative Rulemaking & Guidance Documents

The court heard oral arguments in Papa v. Department of Health ServicesIn this case, the court will determine whether a Wisconsin Department of Health Services (DHS) policy in DHS’s Medicaid Provider Handbook has the “force of law” (Wis. Stat. § 227.01(13)) and should be promulgated as an administrative rule and subject to judicial review.

Medicaid-certified nurse Kathleen Papa and Professional Homecare Providers, Inc. (PHP) filed this lawsuit against DHS regarding Topic #66 in DHS’s Medicaid Provider Handbook. Topic #66 states that Medicaid providers must “meet all applicable program requirements” for reimbursement. If providers fail to meet all requirements, DHS can recoup payments from the providers. Papa and PHP argued that Topic #66 was an illegal unpromulgated administrative rule and that the policy exceeded DHS’s explicit statutory authority under Wis. Stat. Ch. 227.

The Supreme Court will review the Court of Appeals finding that Topic #66 was not an administrative rule, and thus Papa and PHP could not obtain a declaratory judgement via Wis. Stat. Ch. 227 judicial review of administrative rule proceedings. Additionally, the Supreme Court will review whether Topic #66 – if not a rule – is a guidance document also subject to judicial review under Ch. 227.

 

April 27 – Gambling Statutes

The court heard Quick Charge Kiosk, LLC v. Josh Kaul, which will determine whether gaming and cell phone charging machines operated by Quick Charge violate certain Wisconsin gambling statutes.

The Quick Charge machines allow customers who insert a dollar in the machine to receive one minute of charging time and 100 credits to play the video chance game. After the charging time expires, customers can no longer play the game but can redeem their remaining credits for cash at the same rate for which they paid for the credits ($1 for 100 credits).

Some municipalities attempted to remove the Quick Charge machines because they believed the machines were illegal gambling devices. In this case, Quick Charge filed an action seeking a declaratory judgment that the machines are in compliance with Wisconsin’s gambling statutes. The state Department of Justice moved for summary judgment, asking the court to declare the machines unlawful.

The Supreme Court will examine whether or not the gambling statutes apply to this specific type of machine and to promotions run by Quick Charge.

Thompson v. State Farm Fire & Casualty Co. (Homeowners Insurance)

In Thompson v. State Farm Fire & Casualty Co. (2019AP1182), the Court of Appeals District III held that the plaintiff’s injury occurred after the expiration of the insurer’s policy period, so there was no coverage for the plaintiff’s claims.

The Thompsons were visiting a home in Weyerhauser, Wis., in July 2016 when a deck railing collapsed and Richard Thompson fell off the deck. Previous homeowners William and Susan Carroll had built the deck. Seeking compensation for Richard’s injury, the Thompsons sued various persons, including the Carrolls and their homeowners insurer for the Weyerhauser house, Wilson Mutual. The Carrolls’ policies with Wilson mutual expired in August 2013, a few months after they sold the house.

The Wilson Mutual policy provided coverage for liability of the insured “because of bodily injury or property damage caused by an occurrence,” defining “occurrence” as “an accident…that results in ‘bodily injury’ or ‘property damage’ during the policy period.” The policy further states that “This policy only covers losses, ‘bodily injury,’ and ‘property damage’ that occur during the policy period.”

The court found that Wilson Mutual did not cover the Thompsons’ claims because the “occurrence” of “bodily injury” to Richard Thompson occurred in 2016, after the expiration of the Wilson Mutual policy period in 2013.

United America, LLC v. DOT (Nonstructural Damages in DOT Takings)

*This case is recommended for publication.

 

In United America, LLC v. DOT (2018AP2383), the Court of Appeals District III held that nonstructural damages to private property are not compensable when the Department of Transportation (DOT) makes a change of grade to an abutting street.

When DOT changes the grade of a street or highway, landowners nearby may make claims for damages related to the change of grade, even if their land was not taken (Wis. Stat. § 32.18).

In this case, United America operated a gas station and convenience store on the property at issue. DOT completed a project that raised one of the streets at the intersection near United America’s property to match the grade of an overpass. The overpass significantly reduced vehicular access to United America’s gas station and convenience store, causing it to lose approximately 90 percent of its business. United America subsequently made a claim under § 32.18.

United America argued that “damages” under that statute include nonstructural damages such as reduction in commercial property value resulting from the change of grade. DOT argued that only structural, physical damages due to the change of grade are compensable under the statute.

The court agreed with DOT. The plain language of § 32.18 states that landowners can make claims for “any damages to said lands” from a change of grade. United America’s argument that “any damages” includes nonstructural damages – such as loss of business – would render the phrase “to said lands” superfluous. The Legislature did not specifically provide for damages for diminution in value in change of grade damages claims, as it has in other takings statutes. Therefore, non-physical damages related to lost property value or lost business are not compensable under § 32.18.

Welter v. LIRC (Worker’s Compensation)

In Welter v. LIRC (2018AP1940), the Court of Appeals District III held that the plaintiff’s surgery was not compensable under Worker’s Compensation because her workplace injury had healed before the surgery.

Plaintiff Susan Welter served as a school bus monitor for Student Transit – Eau Claire. Welter had a knee replacement in 2003. In 2013, she experienced some knee pain but declined to undergo a second knee replacement at that time. In 2014, she slipped and fell on ice at work, and doctors said the work injury could have exacerbated her preexisting knee condition. Welter had a second knee replacement surgery in March 2014. Welter’s doctor said that the workplace injury caused her to undergo the knee replacement earlier than she would have had to otherwise.

A doctor hired by Student Transit opined that the injury caused by the workplace accident had healed by February 2014. The need for knee replacement was not caused by the slip and fall. In fact, the knee replacement had been recommended in 2013, before the fall.

Welter and Student Transit entered into an agreement on most of Welter’s Worker’s Compensation claims, but Welter later filed a Worker’s Compensation claim for medical expenses for costs related to her second knee replacement.

The Labor and Industry Review Commission agreed with Student Transit’s doctor that the workplace injury had healed before Welter’s second knee replacement surgery, so the surgery was not compensable under Worker’s Compensation. The appeals court found there was credible and substantial evidence in the doctor’s testimony to support the Commission’s finding. Therefore, Student Transit and its insurer were not liable for medical expenses related to Welter’s knee replacement surgery.

Southport Commons, LLC v. DOT (Inverse Condemnation)

In Southport Commons, LLC v. DOT (2019AP130), the Court of Appeals District II held that claimants must file against the Department of Transportation (DOT) within three years after damage from DOT construction occurs, not after damage is discovered, according to Wis. Stat. § 88.87(2)(c).

Southport filed this lawsuit alleging damages from when DOT relocated an I-94 frontage road so that it bisected Southport’s property. DOT relocated the frontage road in 2008-09, but Southport didn’t learn of the damages until it received a survey and wetland delineation of its property 2016. Southport filed this lawsuit in 2017.

DOT argued the lawsuit was barred by § 88.87(2)(c), which allows property owners to file for damages from DOT “within three years after the alleged damage occurred.” Southport argued its lawsuit was timely because it filed within three years of discovering the damage.

Based on the plain language of the statute, the court rejected Southport’s argument that the three-year limitation period begins when damage is discovered. Other Wisconsin statutes of limitations distinguish between when damages are “discovered” and when they “occur.” Section § 88.87(2)(c) specifies the limitation begins upon occurrence, not discovery.

The court distinguished this case from Pruim v. Town of Ashford, where the court used “discovered” and “occurred” interchangeably. In that case, the discovery and occurrence happened contemporaneously, so the Pruim decision did not address the question at hand in Southport’s case.